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Unregulated Credit Card Rates Are Breaking Down Consumers


Increased rates will make Citigroup the Grinch this holiday season.

Emails regarding "Citigroup's 'Hail Mary Pass': How to Know Citigroup is in Serious Trouble" are pouring in.

Here's one from "HG" who writes:

Hey Mish,

We have a seven-figure net worth, no mortgage debt (we do own our own home), pay credit debt in full each month, and have credit scores of 726 and 702, respectively. We are 56 and 53 years old.

Just got the Citi 29.99 credit card rate increase notice. It's not limited to those who carry a balance, like the folks who carry $25,000 in debt.

Needless to say, I'm cutting it up on principle, but not closing it so that my credit limits don't go down.


Matters of Principle

Want to take it out on Citigroup (C)? If so, then do what "HG" did.

If you have a Citibank credit card, just stop using the Citicard to deny Citigroup every cent you can.

It's high time for people to stop buying junk they don't need with money they don't have. Citi's actions help.

Citibank Sends Two Million Letters

Here's an email from "MJ", who writes:

Hi Mish,

I got a Citibank letter last week raising my interest rate to 29.99% from 7.99%. I have a 780 credit score and pay my account off every month. My limit was $18,200. I never made a late payment to Citibank (or anyone else).

When I called them to either maintain my current terms or opt-out, the rep told me she had been getting nothing but complaint calls all day. She said Citibank had sent out two million such letters. I was given one choice: accept the new terms or have my account canceled upon its expiration of December, 31, 2009. I told them to cancel the account.

The "Hail Mary" you describe is even larger than you imagined.


I'm hearing many stories about ridiculous rates, but this one takes the cake.

First Premier Bank Offers Card With 79.9% Rate

Consider "No, You're Reading That Right".

Gordon Hageman couldn't believe the credit card offer he got in the mail.

"My first thought, it was a mistake," Hageman said.

The wine distributor called the number on the offer, gave them the offer code, and verified his information. Sure enough, it was right: The pre-approved credit card came with a 79.9% APR

Yes, 79.9%.

The offer is for a Premier card from First Premier Bank, which is based in South Dakota. On its website, First Premier says it is the country's 10th largest issuer of Visa and MasterCard credit cards. The site also says it "focuses on individuals who have less-than-perfect credit but are actually still creditworthy."

According to information on the South Dakota Legislative website, there is "no maximum or usury restriction." In other words, the individual bank can set its own interest rate limits.

Several calls made to First Premier for a comment were not returned.
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